Divorce and Survivor's Annuity Question

[Anonymous]

In my divorce, I chose to keep (and I now pay for) my ex-husband's survivor's annuity benefit. During our marriage ex wanted me to waive the annuity, and advised that a term life insurance policy would be less expensive on a monthly basis, and pay more in the long run. I refused to waive the survivor's annuity, as I resigned from my position and gave up having a "retirement" to raise our two young children, and maintaining the annuity seemed to be a wiser choice at that time.

When ex walked out, I had to hire a lawyer and a PL was filed for abandonment and adultery. Fast forward, divorce is final, retirement PSA still needs to be completed and filed by attorney (who is trying to rack up monthly legal fees before I finally am free, sadly, dealing with and paying my attorney was as horrible as going through the divorce), and my ex is still trying to convince me to waive the annuity and go with term life insurance.

I'd appreciate any constructive insight on why this maybe a better option for me? After all the drama, I just don't trust his perspective, motives, etc., but he is more financially savvy.

I have primary custody of my two children who are still elementary school aged, house had to be sold at a loss, and am looking for work and renting. Ex has retirement and working in private industry.

Thanks.

[Anonymous]

OP - Was your ex a Federal employee?

[Anonymous]

Yes, we both were...

[Anonymous]

Anonymous wrote:Yes, we both were...

FERS or CSRS?

[Anonymous]

Some times it is true that term life can be a cheaper substitute for an annuity. The key issue is what premiums you pay for term life, and how long your term life will last. At some point it will become uneconomical for you to insure. Also it has implications for your access to FEHBP (if you have any).

you can google to find more discussion (http://www.fedsmith.com/2007/08/20/should-you-get-survivor-annuity-purchase/)

[Anonymous]

Some things to think about:



Receipt of Social Security survivors benefits reduces the FERS survivor annuity to minor children. Right now the FERS sirvivor annuity is the lessor of $502 per month per child or $1,506 per month divided by the number of children. Depending on yiur ex's salary history, SS death benefits should be more.

Is the annuity income taxable? Life insurance isn't.

But term life can get incredibly expensive as a person ages.

If he's under CSRS, and dies between federal service and retirement age, you get no benefit. Under FERs, there are limited circumstances where you'd get a benefit, despite a court order.

If he remarries, that may affect your annuity. Total payout to you and new spouse cannot exceed 50-55% of a self-only annuity.

There's a pamphlet on line about court ordered benefits for former spouses.

[Anonymous]

FERS. Thanks so much for the information!